Kinect components only cost $56

When Microsoft announced the $150 price tag of the Kinect motion controller there was a gasp followed by shouts of “How much!?!” from many gamers. $50 more and you can buy a whole console after all.

The cost was put down to the tech inside the controller, but it looks as though the components don’t actually cost that much. UBM Techinsights has performed an analysis of the components used and came up with a bill of materials costing. According to UBM, Microsoft spends just $56 buying parts for each Kinect shipped.

That price does not include manufacturing, shipping, advertising, or research costs, but it does show Microsoft has applied a large premium to the price of the final unit. Israeli company PrimeSense also does well out of each sale of Kinect receiving $17 of those $56.

The iFixit teardown revealed 15 chips, an electric motor, and a cooling fan required to keep Kinect within operating temperatures. So many components belies the low cost of buying everything to make one.

If you add in manufacturing and shipping costs then the price per unit will likely be closer to $70, $80 if we are being generous. That’s still $70 short of the retail price. However, Microsoft may in fact be making a loss on every Kinect sold at the moment if you include the cost of research and development as well as the advertising planned over the holiday period.

Microsoft expects to sell between 3-5 million units in the first quarter of release. Maybe that’s how many it needs to sell to recoup the cost of developing Kinect in the first place. After that, as with every console hardware launch, the profits start to appear and redesigns happen to save manufacturing and component costs.

You do have to ask a question, though. If it’s roughly costing $80 to ship each Kinect, would Microsoft have sold a lot more units at a $100 or $130 price point?